Atlassian (TEAM) Q4 2017 earnings summary

Executive summary

• FY17 revenue reached $619.9M, up 36% YoY; more than 28,000 net-new customers brought the total to 89,237, while free cash flow rose 92% to $183.3M.

• The low-touch, word-of-mouth model supported growth and cash generation; recurring maintenance and subscription revenue exceeded 75% of total revenue in each of the prior three fiscal years.

Financial highlights

• FY17 subscription revenue was $242.1M, up 65%; maintenance $265.5M, up 21%; perpetual licenses $74.6M, up 14%; and other revenue $37.7M, up 45%.

• IFRS gross profit was $500.8M, with an 81% gross margin; operating loss was $63.1M versus $5.9M, and net loss was $42.5M versus net income of $4.4M.

• Adjusted non-IFRS operating income was $104.2M versus $77.1M; adjusted non-IFRS net income was $84.9M versus $71.3M; adjusted diluted EPS was $0.36 versus $0.35.

• Operating cash flow was $199.4M and capital expenditures $16.1M, producing free cash flow of $183.3M versus $95.3M in FY16.

Outlook and guidance

• FY18 cloud infrastructure investment was expected to lift cost of revenue in absolute dollars and potentially as a share of revenue; a full year of Trello amortization was also expected to raise acquired-intangible amortization.

• FY18 capital expenditures were expected to increase; R&D, marketing and sales, and general and administrative expenses were expected to rise in absolute dollars as investment and hiring continued.

• Existing cash and cash equivalents plus operating cash generation were expected to cover anticipated cash needs for at least 12 months; IFRS profitability was not expected in the near term.